U.S. stocks rose on Monday, halting a three-day losing streak, as a spurt of corporate takeovers in the technology and healthcare sectors fueled optimism about share values.
Mergers and acquisitions are typically viewed as bullish as it suggests companies are more optimistic about the business outlook.
A number of deals were announced. Xerox Corp
It's always a positive sign when you see companies putting money to work, whether they buy other companies, invest in new plants, (or) buyback their own stock, said Tim Smalls, head of U.S. stock trading at brokerage firm Execution LLC in Greenwich, Connecticut.
With depressed stock prices, like we've had over the past year-and-a-half, a lot of companies will find it cheaper to buy a company than to grow that same type of company organically. It's a more effective way to put money to work sometimes.
Abbott climbed nearly 3 percent to $48.69 while Affiliated Computer advanced 11.4 percent to $52.64. Xerox, which valued the cash-and-stock deal for Affiliated at an initial $6.4 billion, sank 18.4 percent to $7.33.
With Monday's gains, the Dow Jones industrial average is up about 16 percent in the quarter so far, which would make it the index's best such period since the fourth quarter of 1998.
The Dow Jones industrial average <.DJI> rose 129.92 points, or 1.34 percent, to 9,795.11. The Standard & Poor's 500 Index <.SPX> jumped 17.51 points, or 1.68 percent, to 1,061.89. The Nasdaq Composite Index <.IXIC> shot up 41.50 points, or 1.98 percent, to 2,132.42.
In the last three sessions, the S&P 500 had declined more than 2 percent after rallying nearly 60 percent from the 12-year lows of early March.
Other deals on Monday included U.S. diversified health care company Johnson & Johnson's
Crucell fell 6 percent to $22.29 on Nasdaq, but J&J, a Dow component, was up 1.2 percent at $61.36 on the New York Stock Exchange.
Apple was the Nasdaq's top boost, followed by chipmaker Qualcomm Inc
Dow Chemical Co
Other industrial standouts were planemaker Boeing Co
The Jewish holiday of Yom Kippur observed on Monday kept volumes lighter. The end of the third quarter on Wednesday may spur volatility as fund managers engage in what is known as window dressing -- when they sell laggards in favor of outperformers to spruce up portfolios at quarter's end.
(Editing by Padraic Cassidy)